Page 95 - RUSRptOct18

Metals . Total metals volumes increased 6% y/y, with scrap leading the growth at 14% y/y. Iron ore and ferrous metals rose 7% y/y and 5% y/y, respectively, vs. the flattish base metal ore and coke volumes.
Others. The growth in grain is the fastest YTD (+44% y/y over 8mo18) but slowed to +5% y/y on the high base. Timber volumes accelerated to 11% y/y, while chemicals were flat y/y.
Outlook . The current growth rates, at 3% y/y in volumes and 5% y/y in freight turnover during 8mo18, have set the scene for similar rates in FY18, we think. The high ongoing third quarter, along with the strong price environment for coal, might help gondola lease rates to stay above RUB 1,700 through YE18. We remain bullish on Globaltrans: our unchanged 12-month Target Price of $14.50 implies a 53% ETR: Buy reiterated.
The container ship Venta Maersk loaded with 3,600 containers became the first ever such vessel to traverse the Northern Sea Route , leaving Vladivostok on August 23 by way of South Korea and arriving in St Petersburg on September 26, Vedomosti daily and the Wall Street Journal reported. The traditional southern route from Asia to Europe passing through Suez Canal would take 10 days longer. At the same time Maersk representatives told the Financial Times that "we do not see the Northern Sea Route as a commercial alternative to our existing routes," noting that Venta Maersk shipment was a test one. The main problem of the Northern Sea Route, which became possible due to thinning of ice, is that only narrow container ships with limited capacity accompanied by atomic icebreakers can pass, while the standard ships circulating between Asia and Europe fit about 20,000 containers. The route does not pass many markets, allowing little uploading diversification, and is not available all year long. Nevertheless, the route is well suited for tanker transportation of oil and gas, with most of the total turnover so far accounting for oil tankers and liquefied natural gas (LNG) shipments of Novatek Russian gas producer. The Kremlin continues to bet on the route's potential, as Russia's federal budget will spend RUB40.6bn ($600mn) on the development of the Northern Sea Route in the next three years.
95 RUSSIA Country Report October 2018 www.intellinews.com